Wednesday, November 27, 2019

IndiGo facing cost pressures from ageing fleet, weakening rupee

Indigo, which recently announced induction of 300 Airbus A320neos, could see some slowdown in capacity addition in the near term as a result of the directive from the Directorate General of Civil Aviation (DGCA).

The DGCA mandated that IndiGo must replace its A320neos with older engines with new planes which are delivered.

India’s largest airline by market share, could also continue to face cost pressures due to maintenance of older aircraft and the weakening rupee, according to industry analysts.

The DGCA on Monday directed that for every new aircraft added to IndiGo’s fleet, one of those with unmodified engines should be grounded and the new aircraft be operated on the older one’s schedule. “For the next three to six months, you would want IndiGo to add capacity of 20-25% over the existing base, that may not happen. That will have its impact in terms of how much capacity will be brought in during the January-March quarter,” said an analyst from SBICAP Securities, adding that over the medium to long term horizon, their capacity addition programme should normalise by 2021.
27/11/19 Anwesha Ganguly/Financial Express

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